CALGARY, Alberta, July 31, 2018 (GLOBE NEWSWIRE) — Raging River Exploration Inc. (the “Company” or “Raging River”) (TSX:RRX) announces its operating and financial results for the three and six months ended June 30, 2018. Selected financial and operational information is outlined below and should be read in conjunction with the unaudited interim financial statements and the related management’s discussion and analysis (“MD&A”). These filings will be available at www.sedar.com and the Company’s website at www.rrexploration.com.
Financial and Operating Highlights
|Three months ended
|Percent Change||Six months
|Financial (thousands of dollars except share data)|
|Petroleum and natural gas revenue||150,001||105,982||42||286,313||217,999||31|
|Funds flow from operations (1)||97,625||64,965||50||186,589||137,717||35|
|Per share – basic||0.42||0.28||50||0.81||0.60||35|
|Per share – basic||0.14||0.08||75||0.23||0.15||53|
|Development capital expenditures||79,782||68,640||16||198,192||181,323||9|
|Weighted average shares (thousands)|
|Shares outstanding, end of period (thousands)|
|Operating (6:1 boe conversion)|
|Average daily production|
|Light crude oil and NGLs (bbls/d)||20,943||18,795||11||21,146||19,134||11|
|Heavy crude oil (bbls/d)||917||1,189||(23||)||1,031||1,303||(21||)|
|Natural gas (mcf/d)||10,511||12,185||(14||)||10,119||11,676||(13||)|
|Barrels of oil equivalent (2) (boe/d)||23,611||22,015||7||23,864||22,383||7|
|Oil and gas sales(3)||69.81||52.90||32||66.29||53.81||23|
|Field netback (1)||50.69||35.13||44||47.72||36.34||31|
|Realized loss on risk management contracts(5)||(2.43||)||(0.37||)||557||(1.90||)||(0.12||)||1,483|
|Operating netback (1)||48.26||34.76||39||45.82||36.22||27|
|General and administrative expense||(1.04||)||(1.05||)||(1||)||(1.04||)||(1.04||)||–|
|Realized loss on risk management contracts(6)||(0.05||)||–||100||(0.05||)||–||100|
|Asset retirement expenditures||(0.09||)||(0.15||)||(40||)||(0.06||)||(0.13||)||(54||)|
|Funds flow netback(1)||45.44||32.42||40||43.21||33.98||27|
(1) See “Non-IFRS Measures.”
(2) See ‘“Barrels of Oil Equivalent.”
(3) Excludes unrealized risk management contracts.
(4) Excludes injection and service wells.
(5) Includes realized gains and loss on commodity contracts. Excludes realized loss on interest rate swap.
(6) Loss on interest rate swap.
SECOND QUARTER 2018 HIGHLIGHTS
- Entered into an Arrangement Agreement with Baytex Energy Corp. (“Baytex”) to create a well-capitalized, oil-weighted company with an attractive growth and free cash flow profile. This strategic combination is expected to close on August 22, 2018.
- Achieved quarterly average production of 23,611 boe/d (93% oil) representing an increase of 7% over the comparable period in 2017.
- Achieved funds flow from operations of $97.6 million ($0.42/share basic) relative to $89 million ($0.38/share basic) in the first quarter of 2018 and compared to $65 million ($0.28/share basic) in the second quarter of 2017.
- The Company generated operating netbacks of $50.69/boe on an unhedged basis, an increase of 44% from the second quarter of 2017 and funds flow netbacks of $45.44/boe, an increase of 40% from the second quarter of 2017.
- Generated second quarter net earnings of $32.5 million or $15.15/boe, an increase of 75% from the second quarter of 2017.
- Corporate royalties continue to be stable at 9.1% during the quarter.
- Continued diligent cost control with top decile general and administrative costs of $1.04/boe.
- The Company’s capital expenditures were $79.8 million inclusive of $8.4 million on land and $71.4 million of exploration and development expenditures resulting in the drilling of 51.5 net Viking crude oil wells and 1.0 net Duvernay crude oil well at a 100% success rate.
- Maintained balance sheet strength with second quarter net debt of $311.2 million representing 0.8 times net debt to second quarter annualized funds flow from operations.
Raging River continues to prudently and methodically advance the evaluation of the emerging Duvernay light oil play in central Alberta. We continue to expand our prospective land base and have increased our Duvernay land holdings by 50 net sections this year and we now control approximately 275,000 net acres (430 sections) within the Duvernay light oil fairway.
The two Duvernay wells, Ferrybank (02-20) and Gilby (01-20) that were drilled and uncompleted in the first quarter of 2018, have both been successfully completed and were recently placed on-stream. First oil was recently witnessed on both wells however it is anticipated that no meaningful rates will be available for at least another 45-60 days.
Raging River is currently drilling two follow up locations approximately 5 miles southwest of our Duvernay light oil discovery well at 14-36 in the Pembina area. Drilling of both wells will be complete within the next 10 days and completion operations on the wells are expected to begin in mid-September. The 14-36 well discovery continues to exhibit strong production performance with average production in June (based on field estimates) of 450 boe/d (86% light oil and NGL’s).
Additional follow up locations are currently being licensed in both the Pembina and Ferrybank areas to allow for potential expanded activities later in the fourth quarter.
During the second quarter of 2018, the Company drilled 51.5 net Viking horizontal light oil wells with a 100% success rate. Four drilling rigs and one fracture stimulation crew are currently executing our development program. The Viking asset base continues to generate significant free cash flow that is currently being allocated to fund our ongoing Duvernay light oil evaluation program.
STRATEGIC COMBINATION WITH BAYTEX
On June 18, 2018, Raging River and Baytex announced that their respective boards of directors had unanimously agreed to a strategic combination of the two companies (the “Transaction”). The combined company, which will operate under the Baytex name, will be a well-capitalized, oil-weighted company with an attractive growth and free cash flow profile provided by its world class assets across North America.
The combined company is expected to have production of approximately 94,000 boe/d from a diverse portfolio of high quality oil assets, including Viking, Peace River, Lloydminster and East Duvernay Shale properties in Canada and the Eagle Ford in Texas. The combined company will have a deep inventory of high quality drilling prospects that generate top tier returns on invested capital and have the capability to deliver meaningful organic production growth.
The Transaction will result in holders of common shares of Raging River receiving, directly or indirectly, 1.36 common shares of Baytex for each Raging River common share owned. The Transaction is subject to approval by the shareholders of both companies, the Court of Queen’s Bench of Alberta and certain regulatory and other authorities, and is subject to the satisfaction or waiver of other customary closing conditions.
The joint management information circular was mailed to shareholders of each of Raging River and Baytex on July 20, 2018. Raging River and Baytex shareholders will hold their respective shareholder meetings on August 21, 2018 and the Transaction is expected to close on August 22, 2018. For further information on the Transaction, please see the joint management information circular dated July 12, 2018 and the joint press release dated June 18, 2018.
FOR FURTHER INFORMATION PLEASE CONTACT:
|RAGING RIVER EXPLORATION INC.
Mr. Neil Roszell, P. Eng.
CEO and Executive Chairman
Tel: (403) 767-1250; Fax: (403) 387-2951
|RAGING RIVER EXPLORATION INC.
Mr. Bruce Beynon, P. Geol.
Tel: (403) 767-1251; Fax: (403) 387-2951
RAGING RIVER EXPLORATION INC.
Mr. Jerry Sapieha, CA
Vice President, Finance and Chief Financial Officer
Tel: (403) 767-1265; Fax: (403) 387-2951